Question

A customer wishes to open an account to fund payment of private middle school tuition. If the customer does not wish to deposit more than $2,000 per year and wishes to get a tax benefit, the best advice is for the customer to open a:

Answer 1

Answer: Coverdell Education Savings Account (ESA)

Step-by-step explanation:

A Coverdell Education Savings Account (ESA) is a type of Trust account created by the US Government to help families fund the educational expenses of their members who are aged 18 or below.

This account is not Taxable as the US Government wants to use it as a way to encourage Educational Expenditure.

The account however is limited to a maximum deposit of $2,000 per year per beneficiary and so is perfect for the customer in question.